STU - Steel & Tube Holdings

[see weed]

If they make $30m after tax, (yes I know others are talking higher EBIT's which implies more but let's be a little conservative), that's 18 cps and if they pay out 70% of that its 12.6 cps fully imputed = 17.5 cps gross, (12.6 / 0.72), and on a $1.67 share price that a gross yield of ~ 10.5% !

$35m after tax, say in FY23 would be 21 cps and could lead to 15 cps fully imputed dividends which would be 20.83 cps gross and a gross FY 23 yield of ~ 12.5%

Not saying it will happen, just playing with my steam powered abacus around the possibility of it being that way.

Need nerves of steel (you see what I did there) to hold through all the geo political and Covid garbage at present. I am only recently on board so I have a full tank of patience to hold and see what happens here.

Same here, been topping up from $1.49 last December. 9%+ yld, another 5 days before ex div. and sp at $1.56 atm. Get in now and grab a bargain before it hits $1.70

[Ekrub]

Good to see the SP holding up, or even improving (as at 1600) on ex-div day. Augurs well, as they say.

[Recaster]

Just looking at the accounts without getting into predictions or valuations. My take on this company:

Interim Accounts to 31 December, 2021

https://recastinvestor.substack.com/...nd-tube-stunzx

Annual Accounts to 30 June, 2021

https://recastinvestor.substack.com/...nd-tube-stunzx

Comments for improvements greatly appreciated.

[Scrunch]

Just looking at the accounts without getting into predictions or valuations. My take on this company:

Interim Accounts to 31 December, 2021

https://recastinvestor.substack.com/...nd-tube-stunzx

Annual Accounts to 30 June, 2021

https://recastinvestor.substack.com/...nd-tube-stunzx

Comments for improvements greatly appreciated.

My biggest observation is that within the financial statements for 31 Dec 2021 there are $99m of lease liabilities and $80.9m of right of use assets and only $2m of bank debt. Within this analysis these operational leases are presented as "interest bearing debt" and "Fixed assets" and I think it may be better to preserve the lease liability / right of use structure rather than try and simplify it as being interest bearing debt/fixed assets.

Surplus cash can't readily be applied to repaying this "debt" because its just future year rental payments. There is limited potential to sell the "right of use asset" when there is usually at least the option of selling fixed assets. In a rising interest rate environment, you won't get the same interest rate expense increase shock from lease liabilities as you get from bank debt. Typically commercial leases do not have financial covenants that would apply to bank based debt, so if there was a decline in performance you won't be beholden to the bank the same way as if you owed and couldn't repay $100m. I can understand why they made the accounting standards change, but its still a work-in-progess how to deal with these new items on the financial statements.

[Recaster]

Great point Scrunch, thanks for the feedback. I had considered the issue and decided to go the simplicity route but I'll have a think about whether to keep doing it that way. The whole ROU is a thorny issue; one main thing is to make sure the ROU interest goes to funding costs. Perhaps I'll just make a note in the analysis on the subject. Cheers.

[winner69]

Good work recaster

Love your comment 'The company blew through $21.8 mn of cash '

Cheers

[Poet]

Rebuilding steel margins as prices soar | BusinessDesk

Informative article for those with access

[Poet]

Good work recaster

Love your comment 'The company blew through $21.8 mn of cash '

Cheers

They increased inventory levels considerably in that half year and will now be making windfall profits both by having available stock and by having stock bought at lower prices before the latest world ructions caused even more price inflation. Smart moves IMO even if it does deteriorate the balance sheet temporarily. I think this company is on a positive
roll since the new leadership took over.

[Recaster]

Yes, perhaps 'blew through' was the wrong choice of words. Apologies.

[winner69]

Yes, perhaps 'blew through' was the wrong choice of words. Apologies.

No need to apologise …say what you think

‘Blew through’ and ‘cash burn’ are real things though

A while ago many were clamouring for a share buy back / special divie to use up millions sitting in the bank but now they invested in inventory it’s a great move. Hope it turns out all OK